Stocks Dip, Oil Prices Surge Amid Heightened Geopolitical Tensions Between US and Iran
Global markets witnessed a notable shift on Friday as most Asian equities fell while oil prices surged to their highest levels since June.
The sudden market movement follows warnings from United States President Donald Trump regarding potential military action against Iran if Tehran fails to agree to a “meaningful deal” during ongoing nuclear talks.
The President’s remarks have exacerbated geopolitical fears, casting a shadow over what had been a tentative market recovery from an earlier AI-fueled sell-off.
Traders are also keeping a close eye on upcoming U.S. economic data expected later on Friday, which may provide fresh insights into the trajectory of the world’s top economy.
Recent forecast-beating economic figures have fostered optimism but simultaneously tempered expectations for additional interest rate cuts.
Speaking at the inaugural meeting of his “Board of Peace”, an initiative aimed at securing stability in Gaza, Trump pressured Tehran to finalize an agreement.
“It’s proven to be over the years not easy to make a meaningful deal with Iran. We have to make a meaningful deal otherwise bad things happen,” he stated.
As he spoke, the U.S. reportedly deployed warships, fighter jets, and other military hardware to the region.
Trump further cautioned that Washington “may have to take it a step further” if an agreement isn’t reached, adding, “You’re going to be finding out over the next probably 10 days.”
Echoing this hardline stance, Israeli Prime Minister Benjamin Netanyahu issued his own stark warning earlier: “If the ayatollahs make a mistake and attack us, they will receive a response they cannot even imagine.”
These threats come merely days after the U.S. and Iran concluded a second round of Omani-mediated talks in Geneva. Washington continues its efforts to prevent Iran from developing a nuclear weapon, an ambition Tehran strongly denies holding.
The looming prospect of conflict in the crude-rich Middle East has caused oil prices to rally significantly this week. On Friday, West Texas Intermediate rose 0.9 percent to $67.05 per barrel, while Brent North Sea Crude saw an equivalent increase to $72.27 per barrel.
In contrast, equity markets were rattled. Tokyo’s Nikkei 225 fell by 1.1 percent to close at 56,825.70, and Hong Kong’s Hang Seng Index slipped 0.7 percent to 26,508.98 as it reopened following a three-day break. Markets in Sydney, Wellington, and Bangkok also recorded losses.
However, Seoul bucked the trend, rallying to a fresh record driven by increased tech buying, alongside gains in Singapore, Manila, and Mumbai.
Despite the aggressive rhetoric, analysts believe military conflict is not inevitable. City Index market analyst Matt Simpson characterized the U.S. posturing as a pressure tactic.
“At its core, this looks like pressure and leverage rather than a prelude to invasion. The US is pairing military readiness with stalled nuclear negotiations, signalling it has credible strike options if talks fail.
“That doesn’t automatically translate into boots on the ground or a regime-change campaign. While military assets dominate headlines, diplomacy is still in motion,” Simpson wrote.
Meanwhile, shares in Jakarta dipped slightly despite a newly reached trade agreement between Trump and Indonesian President Prabowo Subianto.
The pact, finalizing months of negotiations, establishes a 19 percent tariff on Indonesian goods entering the U.S., a significant relief from the previously threatened 32 percent levy.
In exchange, Jakarta has committed to purchasing $33 billion worth of U.S. energy commodities, agricultural products, and aviation-related goods, including Boeing aircraft.
